GKN Automotive Plant: Birmingham

Jack Dromey Excerpts

Wednesday 28th April 2021 Westminster Hall

[Jack Dromey (Birmingham, Erdington) (Lab)]

I beg to move,

That this House has considered the proposed closure of GKN Automotive plant in Birmingham.

It is a pleasure to serve under your chairmanship, Dame Angela. I declare an interest as, for 47 years, a member of, first, the Transport and General Workers Union and then Unite, and ultimately its deputy general secretary.

Manufacturing matters to the success of the UK. Manufacturing, the genius of science and the national health service have seen more than 30 million people vaccinated against covid. Manufacturing will be key to recovery. Manufacturing—green manufacturing—is key to combating climate change. Manufacturing getting it right is key to the recovery of Brexit Britain. And manufacturing is key to levelling up.

Automotive is the jewel in the crown of British manufacturing, and key companies in the automotive supply chain exemplify that excellence. GKN is one of them. GKN has a remarkable history. The company goes back over 262 years. It made the cannonballs for the battle of Waterloo and built Spitfires for the battle of Britain. The Chester Road plant has been operational for more than 50 years. Historically, it made parts for the original Mini Cooper. Throughout its history, GKN has been central to iconic moments in British history and British culture. Today, it is a major supplier of drive shafts and prop shafts to the automotive industry, supplying almost every car manufacturer in the UK.

In 2018, GKN was subject to a hostile takeover by Melrose Industries, a City firm with a reputation for buying companies, breaking them up and selling them on. For example, in July 2008, Melrose acquired the FKI group, of which manufacturing firm Brush is part. Melrose began selling off parts of the group in 2009 and sold off about 15 businesses between 2009 and 2014. It implemented severe job cuts at the Brush plant in Loughborough, taking the number of employees from 1,200 down to 600, with a further 270 redundancies in 2018, and, in the process, moving production overseas and hollowing out a once great company. Today, global field service engineers still employed by Brush are balloting against fire and rehire pay cuts of up to £15,000.

In 2018, that chequered past mobilised the GKN workers, their union, Unite, and a cross-party group of MPs—I stress that it was a cross-party group—in opposition to the takeover to demand assurances from Melrose that there would be no repeat of that experience if it acquired GKN. In return, Melrose promised that it was “ambitious for GKN’s future” and wished to make it

“an engineering and manufacturing powerhouse…We are British and work in the national interest.”

Following a hard-fought campaign, Melrose then won the shareholder vote by 52% to 48%, with the support of the hedge funds being critical as they sold GKN short. In the years since the takeover there have been some job losses at GKN Chester Road. However, the workers’ union, Unite, had been in discussions with the company about investment in the plant, and GKN Chester Road appeared in good stead, ending furlough in July last year. It was producing, and then out of the blue in February this year the closure of the Chester Road plant was announced by GKN with the loss of 519 jobs, and twice that number in the supply chain. It is now clear—the company has acknowledged this—that it had been planning the closure of the site for two years, with no consultation whatever with the workers. Its intention now is to export production and jobs from Birmingham to Poland and France. The European sites will be the beneficiaries of the loss of 519 well-paid, skilled jobs in an area with twice the national unemployment rate. I often say about Erdington, “It may be rich in talent, but it is one of the poorest constituencies in the country.”

The consequences of closure will be grave, not least the human cost. I visited the site again two weeks ago. One worker in his late 20s has three kids, including two young children. His partner stays at home to raise their children and he is the only breadwinner in the family. The kids go to school locally. Their whole family life is based in Erdington. What will his young family do if the plant shuts? No other well-paid jobs in the area can replace his current job. Another worker in his mid-20s is a single parent with two young kids. His father and grandfather worked at the GKN plant, with 60 to 70 years’ experience working for GKN in the family. What will he do if the plant shuts?

There are also wider consequences for the British automotive industry. What happens to GKN in the coming months will be a litmus paper test for the Government’s commitment to stand up for the industry. On supply chain consequences, GKN supplies nearly every major car manufacturer in Britain with drive shafts and prop shafts. It is the only firm in Britain with the capability to fulfil the orders that it does. What will be the cost to British automotive of losing a British supplier to Europe, particularly as we emerge from the European Union?

On building up supply chain resilience, there is now a welcome and major debate raging about supply chain resilience and certainty. The continuity of supply chains during periods of disruption are vital, as the past 12 months have shown. It is crucial for the resilience and competitiveness of British automotive over its international rivals that we have British-made parts supplying British car plants. At a time when the debate is raging about onshoring jobs and production back to the UK, here we have a company that is offshoring. What will be the consequences for British automotive if we lose the domestic production capacity of such vital components? Do we really want to move from a just-in-time supply chain of a matter of hours to a supply chain four and five days long, stretching all the way to Poland?

Closure is also a threat to the Government’s global Britain agenda. Part of the Government’s agenda is that, post-Brexit, the UK must look to international markets beyond Europe. The Government have sought trade deals with the likes of Japan and Australia. Aside from the merits or demerits of such deals, to benefit from such free trade agreements UK carmakers such as Jaguar Land Rover need enough local content in their cars to qualify to avoid paying tariffs. A driveline or e-axle equates to 15% of an electric vehicle, a significant part of their value. If we lose GKN’s British-made parts, car makers such as JLR could face significant tariffs on the cars they export to international markets. That poses grave risks to the international competitiveness of the industry. What signal does that send about Britain as a place to do business? We run the serious risk of iconic British cars potentially not being considered British-made, because of the lack of local content in them. Surely that cannot be the global Britain that the Government advocate.

There is a potential solution. We must now act to protect the workers, British manufacturing and the national interest. The consultation between GKN and the workforce is ongoing. I pay tribute to the union convener at the plant, Frank Duffy, and his shop stewards and members, for the admirable leadership that they have shown throughout what has been a difficult period for them. They have my unending support and solidarity.

During the consultation process Melrose’s case for closure has crumbled under the weight of scrutiny from the union. Despite Melrose’s claims, the Chester Road site is not unprofitable, but its accounts have been unduly impacted by transfer pricing within the business, so that other plants appear more profitable. The estimated savings from closure have also been shown to be hugely inflated. It is now clear that modest investment in the plant would allow it to be more productive than GKN’s other European plants. It already is more productive than a number of them. Alternatives to closure must therefore now be assessed in good faith by Melrose. Unite, Frank, and Steve Turner the assistant general secretary have all worked tirelessly to develop a cast iron business case for the future of the Chester Road site and they now rightly expect the company to respond in good faith.

Part of their plan would make the Chester Road plant fit for the future of the electrification process in automotive, so that it can play its part in the transition to electric vehicles, by also manufacturing what are called electric drive units. The chief executive of Melrose, Simon Peckham, made a commitment before the Business, Energy and Industrial Strategy Committee in February to assess such alternatives to closure during the consultation with the workers. Melrose must now honour that commitment. In parallel, together with the workers’ union, Unite, I have had constructive discussions with the Secretary of State and the Minister responsible, Lord Grimstone. It is important that the Government now match words with action and show their resolve to protect GKN and its workers. All parties must play their part in finding alternatives to closure, and all options must be considered to save the 519 jobs, and for the continued prosperity of British automotive, which is so vital to the economy of the west midlands.

From what I have outlined today it is clear beyond doubt that the moral argument is on the side of the workers at GKN, but I am the first to recognise that ultimately what matters to save GKN Chester Road is the business argument. That is why it is so important that Melrose should fulfil its commitment to consider Unite’s alternative business case, and that the Government should also act to ensure that that happens, playing their part to the full at the next stages. The Government are not a powerless bystander in the situation. When the national interest is threatened in this way, by the harm that the loss of GKN would inflict on British automotive, it is incumbent on the Government to act swiftly and decisively. It would be churlish not to acknowledge that the early discussions have been positive, and what the Government do at the next stages will be crucial.

I want to end on a positive note, from my years in the trade union movement. People develop an instinct about when battles can be won or lost, and I am steadfast in my belief that, with good faith on all sides, disaster for 519 workers in Erdington can be avoided. I pay tribute to their strength and courage. I can guarantee that they, the workers, will do their utmost to save the plant from closure. They are the living embodiment of all that is great about this country and British manufacturing. We can walk around the floor, as I have many times, and see generation after generation—for 10, 15, 20, 30 or 40 years and more—serving this nation well. They are truly the best of Britain and the best of British manufacturing. It now falls on Melrose and the Government to match their courage to save thousands of British jobs and to act now to secure the future of the great GKN Automotive plant on Chester Road, Birmingham.

--- Later in debate ---

[Jack Dromey]

I thank all those who have spoken in what has been a powerful debate. We have heard about experiences from Luton to Birkenhead in traditional areas of engineering and motor manufacturing. My hon. Friend the Member for Easington (Grahame Morris) made a powerful contribution and pointed out that the four directors of Melrose have done rather well out of what has happened in the last three years.

Let me go straight to the heart of the matter. This is a great plant with a great history that must not now become history. That would be a betrayal of the workers concerned, but also a betrayal of the British national interest. As the shadow Minister, my hon. Friend the Member for Manchester Central (Lucy Powell), said and the Minister acknowledged, there are serious implications if the remaining domestic producer of vital components for the industry closes and we become dependent on supply chains from France, Poland and beyond. There are serious issues in terms of the British national interest.

It is fascinating that today, in its interesting report, the Covid Recovery Commission talks about

“the Great British Supply Chain”.

A fundamental rethink is under way in terms of vital strategic capabilities, and certainly the Chester Road plant is an absolutely vital strategic capability for companies such as Jaguar Land Rover and Toyota.

Crucially for the next stages, as a former trade unionist I always used to say that ultimately it is about getting to an outcome, a result, for the workers and for the country. That involves three parties. First is Unite, whose work on a well thought through and creative alternative I applaud. Let us be clear: it stands ready to have whatever discussions are necessary. In my experience, they can be difficult discussions, but Unite stands ready to play its part.

Second is Melrose. As I think has become widely known, I am not its greatest fan in terms of how it has conducted itself, but it has committed to looking at alternatives to closure and we must hold it to that commitment. Third is the role of Government to defend the British national interest and unashamedly recognise that the loss of 519 directly employed jobs and all those in the supply chain will have devastating consequences for the industry in the midlands in one of the poorest parts of our country.

The Minister has said some interesting and helpful things about our preparedness to look at a range of options for capital equipment and skills. These things always go in two phases. The second phase—God forbid—I never want to get to, and that is what happens if closure takes place and we have to pick up the pieces. Believe you me: it would be absolutely heartbreaking, were that to ever happen. The first phase is the one that we must concentrate on, so that the plant does not close and so that creative, well thought through alternatives are found and negotiated with assurances given. That is eminently achievable.

The Minister is right that we both have strong backgrounds in the world of work, and I have been involved, sadly, in many, many workplace closures over the years, some of which we have won, such as Rosyth Dockyard. I know what it takes to get to a result; it is eminently achievable. Forgive me if I stress this for one final time: the role of Government will be absolutely key in holding Melrose to its commitments. If they do that, it is possible for a plant with a great history to have a great future. If we meet the workers or talk to car industry executives, we come to recognise just how important this is. It would be utterly heartbreaking, and a betrayal of the British national interest, were the plant to close. That must never happen.

Question put and agreed to.

Resolved,

That this House has considered the proposed closure of GKN Automotive plant in Birmingham.